Are WREG and WPTY About to Become Sister Stations?

It appears the folks buying the New York Times Broadcast group have an appetite for TV stations. An article in TVNewsday forwarded to me by SP indicates that the Oak Hill Capital partners have joined forces with another group in a bid to purchase the Clear Channel TV group. The bid is exceeding one billion dollars at this point. The question SP raised is this: Can a private equity group that just bought one television group but has never run a TV station before, handle another major group too? If their bid is successful I guess that question will be answered. I wonder what kind of learning curve there might be? What about duopoly issues and what would happen with WLMT? Would the newsrooms of WPTY and WREG be combined? Where would the operations be located? Would the weather operations grow by two more? Who would anchor the newscasts? Can you sell a used One Million Watt Sooper-Dooper Gonad Wax-Your-Car Twice Nexrad Storm Seeker Radar since they wouldn’t need two of those puppies? A number of questions and we’ll have to wait for answers.

Here’s the article as forwarded to me.

Bids top $1 billion

FOUR IN THE RUNNING FOR CLEAR CHANNEL TV

TVNEWSDAY, Apr. 16, 8:36 AM ET

Nexstar and three entites backed by private-equity funds are vying for the 42 stations in 24 markets, sources say. Equity bidders are Kelso, Oak Hill/Diamond Castle and Providence, each in partnership with established broadcast manager.

By Harry A. Jessell

With the bidding past the $1 billion mark, four companies are vying for Clear Channel Television, the division of Clear Channel Communications that operates 42 TV stations in 24 small- and mid-sized markets, and a winner could be named with the next two weeks, according to industry sources.

The four bidders include Nexstar Broadcasting Group, a publicly traded broadcast group headed by Perry Sook , along with three entities backed by private equity firms that have been active in the station trading marketplace over the past year.

Providence Equity Partners along with broadcaster Sandy DiPasquale. They currently operate the BlueStone group, but are selling it to Bongarten and Diamond Castle as noted above.

The next round of bids is due Wednesday, and parent Clear Channel Communications is expected to pick a winner within a week of those bids, one source close to the dealmaking said.

The same source said the price tag is currently around $1.1 billion and that all the bidders are within $75 million of each others.

Representatives of the bidders declined to comment on the record.

Assuming Clear Channel TV has annual revenue of about $350 million and a cash-flow multiple of 30 percent, $1.1 billion would represent a price with a cash-flow multiple of just over10.

According to the BIA Financial Network, the group ranks 18th among TV station groups in annual revenue and 17th in audience reach. Its stations cover about 12.5% of all TV homes in the nation.

The group operates stations in markets ranging from San Francisco (DMA 6) to Fairbanks , Alaska . (DMA 203), but the San Francisco is an independent station on the fringe of the market. It’s most important station is WKRC, the CBS affiliate in Cincinnati.

Clear Channel Communications announced its decision to sell its TV group and 448 of its 1,150 radio stations last November at the same time it agreed to a takeover by private equity groups led by Thomas H. Lee Partners and Bain Capital Partners for $18.7 billion and the assumption of $8 billion in liabilities.

A shareholder vote on the takeover has been scheduled for April 19, the day after the final TV bids are due.

One source said that the parent company intends to proceed with the sale of the TV division, regardless of what happen with the takeover.

5 Comments on “Are WREG and WPTY About to Become Sister Stations?”

Now this would be interesting. Things coming full circle. If you remember it was Kelso who fronted Bert Elllis when he bought WMC from Scripps-Howard back in the early 90’s. It was the cornerstone of what eventually became Raycom. Bert has always had a thing for Memphis and when he came, he put more money in WMC than anyone ever had before or has since. If I were at PTY, I’d much rather see Bert come in that the likes of the notoriously cheap Nexstar.

Now, it is completely beyond me why anyone would want to be investing in a chain of TV stations these days with the declining markets and reduced margins, but I guess that’s why they all got rich working us all to death over the past 30 years.

WREG and WPTY sister stations? Unlikely. Oak Hill, if it buys the Clear Channel stations, would most likely have to divest of stations in markets where it already owns a station. Are there ways around it? Sure. I don’t think a WREG/WPTY marriage would clear any of the FCC’s exceptions. Neither is a failing station (revenue wise). They combine for too much reach in terms of audience and WPTY already has a sister station in WLMT. Could they do an LMA (local management agreement) or JSA (joint sales agreement)? Maybe.

Keep in mind now that the Congress is in Democrat control, the open owenrship rules are closing rapidly. The Republican controlled FCC has had its wings clipped. The most likely scenario if Oak Hill is the winning bid is that they will turn around and sell the WPTY/WLMT combo.

I still don’t think the world is long for five meteorologists at WREG. But that’s just me.

I will defer to you Mr. GM on the duopoly issues. I figured that Oak Hill would buy WPTY/WLMT and then dump WLMT so it would have only two stations in the market but I’m not familiar with the rules on that as you are. I think some of the folks at WPTY may have already been considering the view from Down On The River. I also agree that the herd of five meteorologists will be thinned a bit at WREG. The question is: do they do it by the bottom line or do they do it by name recognition in the market place.

And Michelle, I’m not hearing much about the News Director at WREG since he assumed the reins. I know he has a solid news background and he appears to be well liked by those who have shared their thoughts with me. Oh, you hear the usual Bitching & Moaning but you will have that no matter who is in charge. I would assume the job is his as long as he wants it since he was in the saddle when WREG hit number One and he shouldn’t have a problem as long as they retain that lofty perch.